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Strategies & Market Trends : Dino's Bar & Grill
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To: Goose94 who wrote (59438)7/16/2019 8:17:58 PM
From: Goose94Read Replies (1) of 202283
 
ARC Resources (ARX-T) top pick from Ryan Bushell on BNN.ca Market Call Tuesday July 16th @ 1200ET

I liked this stock much at higher than these levels last year and have continued to average clients down during this period of extreme weakness. Although the apathy towards Canadian oil and gas companies over the past few years is nothing new, I find the recent weakness in ARC’s shares particularly perplexing. The recently completed quarter had the exact same gross profit as the same quarter in 2018 but the shares are down around 50 per cent. On an annual basis, the company had 60 per cent of the EBITDA that they had in a peak year of 2014, but the shares are less than 20 per cent of their peak valuation.

In the past year the company was removed from the TSX 60 and MSCI Canada benchmarks and is outspending cash flow as they bring on a project in B.C. Both of these events likely put pressure on the shares from quantitative and short-term-oriented participants who don’t dig past the headline numbers. When you look deeper at this company, you can see that they’re well balanced between oil, gas and natural gas liquids, have a huge undeveloped land position, and have a management team that’s aligned with shareholders and thinking about the long term. As LNG Canada comes into clearer focus over the next five, years I expect ARC’s outlook to improve. I also expect them to maintain the dividend as they recently cut their capital expenditures program in order to preserve cash flow. Investors who purchase the shares today get a nearly 10 per cent yield to be patient, with lots of upside in the medium to long term.
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